Case Shiller June 2014

The Case Shiller has a 60 day lag so this morning’s monthly report reflects June 2014. Portland has climbed to 168.97, just 9.5% lower than July 2007 high of 186.51. That’s significant as the increase from this time last year is 9.1%.

The graph above shows Portland’s Case Shiller Index and a 4% average increase since 2000, when the Index was set at 100. Historically the housing market’s long-term increase has been about 4% so we can see that we still have some room for “normal.” Following the 4% line, we’d reach an all time Portland high in December of 2015.

Had the Index followed the 4% line, at July 2007 peak, the Index would have been 134.2 instead of 186.51. Today, the Index would be 176.02 following the 4% trend instead of the actual 168.97. On a historical basis, we can say the market is 4% below what history tells us to expect.

It seems fair to expect the market to slow down. We’ve seen very tight inventory which has created a seller’s market. Interest rates have dropped to where we expect they can only go up. We’re not far from reaching expected historical market values. We can’t factor global and national political situations in here but neither can they be ignored. All of this leads to the assumption that we’re not going to continue to see annual increases at the rate we have seen recently- that’s a good thing as we want to ease back onto the 4% line.